Longbow's Wittine Likes EMC Over NetApp, Nimble Storage

In a report published Tuesday, Longbow analyst Joe Wittine said that with Europe’s IT hardware environment being soft in 2Q, there was reason to be bullish on EMC Corporation EMC and downbeat on NetApp Inc. NTAP.

IT resellers in Europe have witnessed some spending delays in 2Q, while those in the US have experienced the same, albeit to a lesser extent. The absence of strength in the last couple of weeks of June could pose “some risk to the quarter,” analyst Joe Wittine said, while adding, “…with the channel sticking to CY15 forecasts and remaining optimistic on a better 2H, we will wait until gauging quarter-end trends to revise models.”

In the report Longbow enumerated what was changing:

• While NetApp has loyal customers, there was an absence of “enthusiasm in the channel to push FAS arrays to new customers.”
• “Favorable commentary on EMC's converged offerings (VCE, VSpex, and new products) is widespread, and more bullish than we were expecting. We are hearing less on NTAP's competing FlexPod.”
• In core midrange 3Par continues to gain market share and EMC VNX is steady, backed by higher price discounts in the US.
• “Projects delayed at the end of 1Q did close in 2Q, a positive sign given the same dynamic could be at play in June.”

Wittine maintained a Buy rating on EMC, saying that resellers' hopes of acceleration in the back half of the year match EMC's 2015 guidance, and the “clear strength in EMC's converged offerings could drive upside.”

Maintaining a Neutral rating on NetApp, the report added that the company could continue to lose market share in FY16, with its brand sustaining damage in the channel on “aggressive competition” from Nimble Storage Inc NMBL, Hewlett-Packard Company’s HPQ 3Par, and others.